New York Short-Term Rentals: Where Cost Segregation Fits (2026)

A Catskills cabin can look particularly appealing on an October weekend. For New Yorkers considering a short-term rental investment, the purchase calculations should include financing, projected bookings and cost segregation, a way to accelerate eligible depreciation deductions.

The financing has become harder to ignore. Freddie Mac's average 30-year fixed mortgage rate reached 7.03% on September 24, up from 6.30% a year earlier. That benchmark covers owner-occupied homes; investment-property loans have their own pricing. Still, it gives buyers a reason to examine every part of a property's financial picture.

One part has changed in their favor. Federal law now allows 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. For a rental property, eligible components can generate deductions in the first year that would otherwise be spread over a much longer period.

Finding a New York Short-Term Rental

Buyers browsing New York rental listings on Rabbu can find operating short-term rentals with historical income information and properties evaluated using modeled revenue projections.

For someone weighing a Hudson Valley farmhouse against a Catskills cottage, those details help put an appealing listing in context. A rental forecast should account for quieter months and any weekends the owner plans to reserve.

SMF Cost Segregation Advisors & Rabbu's newly announced exclusive partnership brings cost segregation analysis directly to short term rental investors by providing real-time depreciation analysis within the Rabbu AI chat. The partnership connects buyers researching short-term rentals with a firm that specializes in the tax classifications of smaller investment properties.

How Cost Segregation Can Accelerate Deductions

SMF's cost segregation studies in New York combine virtual property walkthroughs with engineering analysis and CPA-ready reports. The firm specializes in single family rentals, short term rentals, condos, townhomes, and small multifamily.

The study separates eligible components from the building's longer depreciation schedule, including personal property (5-year), such as qualifying appliances and carpeting, and land improvements (15-year). When those assets meet the federal bonus depreciation requirements, their eligible costs may be deducted in the year they enter service.

For an owner, the practical benefit is cash that can remain available for maintenance, reserves or another investment. Cost segregation changes when eligible costs are deducted. Land is excluded, and the rental building itself does not qualify for the bonus write-off.

When Short-Term Rental Losses Can Offset Other Income

Before commissioning a study, buyers should understand how they will operate the rental and use its deductions.

An average guest stay of seven days or less generally takes the activity outside the rental category under federal passive-loss rules. If the owner also materially participates, allowable losses may offset income such as wages or realized capital gains, subject to other tax limitations.

One of the IRS's seven material participation tests requires more than 100 hours of participation during the tax year and at least as much participation as any other individual. Work can include guest communication, managing bookings and coordinating repairs. Owners should keep records of the work performed and time spent.

For a New York City buyer considering a Catskills cabin or Hudson Valley farmhouse, that means deciding who will run the property between visits. If a local manager or cleaner spends more time on the rental than the owner, the owner would need to satisfy a different material participation test.

Material participation affects how losses can be used; it is not a prerequisite for a cost segregation study. SMF documents eligible depreciation components, while the owner's CPA evaluates how the deductions apply. Reviewing both before closing helps a buyer compare New York rental properties on their expected income and potential after-tax cost.

Getting Started with Rabbu and SMF Cost Segregation Advisors' Limited-Time Discount

Under the partnership, Rabbu referrals receive $250 off SMF's final report, bringing qualifying single-unit studies to a starting price of $1,500, SMF's lowest offer ever. The offer applies to properties purchased on or after September 1, 2026, and operated as short-term rentals, with engagement agreements signed between September 15 and November 15, 2026. Investors should name "Rabbu" as their referral source when requesting a free property evaluation. The discount applies to the final payment, is limited to one per property and cannot be combined with other SMF discounts or referral credits. Additional terms apply.